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United States Inflation

United States: Annual inflation slows in August as consumer prices register first monthly decline since early 2013

August 19, 2014

In August, consumer prices decreased 0.2% over the previous month in seasonally-adjusted terms, which contrasted the 0.1% rise recorded in July. The result marked the first monthly decline since April of last year and undershot market expectations of a flat reading. The decline was underpinned by much lower prices for energy, including gasoline, as well as lower prices for transportation.

Annual inflation decreased from 2.0% in July to 1.7% in August. Meanwhile, core consumer prices, which exclude food and energy prices, were flat over the previous month (July: +0.1% month-on-month). The reading came in below market expectations of 0.2% and marked the weakest result since January 2010. Annual core inflation increased 1.7% in August (July: 1.9%), while annual average core inflation ticked down from 1.8% to 1.7% in August.

FocusEconomics Consensus Forecast participants expect inflation to average 1.7% in 2014, which is unchanged from last month’s forecast. For 2015, the panel expects average inflation to rise to 2.0%.

Author:Carl Kelly, Economist

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United States Economic News

Retail sales grew 0.2% on a seasonally-adjusted month-on-month basis in November, slowing significantly from the upwardly revised 1.1% growth recorded in October (previously reported: +0.8% month-on-month), but nevertheless exceeding market expectations of 0.1%.
The print was mostly weighed on by a contraction in gasoline stations sales (November: -2.3% mom; October: +3.2% mom), mainly reflecting lower prices at the pump in November following the sharp oil price tumble recorded in the previous month—which took some time to feed through to retail prices.

The widely anticipated meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires on 30 November–1 December concluded with an agreement to temporarily halt the escalation of the trade dispute between the world’s two economic giants.

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